129 #dy Biko9 spot: 1.8215 He s ont mn& AD Son ad (st/s / Asx (S/s/ +(TO NB) . We Want 2. Scot Bid 1 Six month Ch G Textbook 1 6215 4 ransactic Expoinc : Measurs changes in Vere of alata dan 3. Ont wurth Premium on call is 4 cents(US) per pound. "HIXons) H. Wish to bu 1 122 5 8) a) more than 4 cents per pound b) 4 cents per pound This means that, to avoid arbitrage, the premium on put must be: dealer. Here d) need more data c) less than 4 cents per pound manacho Matinty , Strike GF 1821.5 price 1.8 2 25 x160 9) 1 Yr fwd = 1. 7 a a a) The Peso gets weaker relative to the contract price. A German speculator wants to speculate using forward contracts. She has bought the E forward against the Peso. She will be happy (make money in E on this contract) if : b) The Peso gets stronger relative to the contract price. c) none of the above, because she has 'locked in' a fixed rate. suggests that in currency markets: a) pound is overvalued relative to $ c) none of the above. b) $ is overvalued relative to pound. Consider the hamburger standard. A hamburger costs $2.30 in the US.. The same hamburger costs POUNDS 1.50 in UK. The actual exchange rate is $1.5/POUND. This 11) ignoring tax effects is: Mexico. 10) (5 points) A US firm has E denominated debt for one year at 15% interest. During the year, Question 12 through 26 are deleted. % E depreciates by 15% relative to the $. The effective cost of debt in dollar terms SI = Ps 2/$. So = Ps 3/$ An American investor realizes 50% return (in $ terms) in one year, on an investment in Returns in Peso terms must be: a) 100% b) -20% c) 0% d) -53.33% e) 50%